Gallatin Ward's All Things Financial Group

Thursday, September 3, 2009

This is a powerful lesson. I learned some new things while putting this together and I’m really excited to present this stuff to you guys. This is the one lesson where we tackle the income and all the others deal with the out-go. Now we know that if you have more out-go than in-come then you have a problem. But we are going to first define a couple things. This is a really good way to assess what you are doing and where you are going.

Vocation, Career, or Job - which do you have?

Vocation: This is something that gets you all fired up. For me, my vocation right now is personal finance. I love it. I could talk about this forever. I enjoy it. I love it. I live it. It is fulfilling to me and it energizes me. Think about something that get’s you all fired up. What is your vocation? Have you found it yet? If not, that’s okay. Not everyone finds it early in life. Some people may never find their true vocation, and that is okay. The important thing to remember is to look for it. Don’t get stuck in a rut and stop dreaming. I could have easily missed out on my vocation if I hadn’t stumbled on Dave Ramsey. It took him to open my eyes and once they were opened, I couldn’t get enough and this became my mission, my passion. It might have taken me 40 years to find it on my own. If you know what yours is, start making plans to follow it!

Career: You can certainly have a very fulfilling job that isn’t a vocation. My last job before I had my first son was working for a home health care agency that provided physical, occupational and speech therapy services to mentally challenged individuals. I wasn’t fired up about my line of work, but I enjoyed it, was fulfilled, and content. If I hadn’t had children, then chances are, that would have been my career. I think I would have been happy in it but it wouldn’t have gotten me as fired up as personal finance does.

Job: I think we’ve all had some of these from time to time, I know most of my past employment experiences were just jobs. Many many people can honestly say, “I hate my job.” Jobs are not something you want to have long term. Sometimes we have to have them to put food on the table to feed our family and that’s called being a responsible adult. But a job is not where we ultimately want to be. If you are in a job, then you should begin to lay out a game plan that you no longer have just a job….you have a career or better yet, a vocation. A job is not the end of the road – just a bump in the road towards finding what you REALLY want to do with your life. Some of our roads may have so many bumps we feel like we’re on the "wake-up line" on the shoulder.

So I urge you to really think about where you are right now.

Negative Career Situations

Sometimes even if you have a great career, vocation, or even a job, you are still faced with the problem that you just need to make more money. Yes, we need to manage what we make better and live on what we make, but sometimes we just have to make more money. About half of the families I deal with have had some kind of “negative career situation.” This means that they’ve either lost their job, gotten a cut in hours, they found a job for less money than they were making, and the household income drops. This develops a crisis.

How do we solve the crisis? We get more income going into the home. That means that if you are in the middle of a negative career situation, you need to find a higher paying job, find a way to make more money at the job you are at, get a second job, or even get a 3rd job. I realize that sometimes it is not easy during these unsure economic times to get a position in your field or area of expertise, but that is when the "job" comes into play. Sometimes you just have to have a job to get food on the table.

The first thing we will be focusing on tonight are the first jobs…the “real” jobs. The careers, vocations, and even those "jobs" that pay the bills (or at least we hope they do). We will later follow up with the second jobs and additional sources of income.

Careers

Did you know that the average job in America lasts 3.2 years? Based on that figure, the average person is expected to have 16-18 jobs in their lifetime! That means if you have been at your job for the last 5 years, you are well overdue for a job change. The days of having one job with the pension are pretty much over. I do realize that is not the case for EVERY American, but the majority of Americans change jobs every 3.2 years.

I personally think it's a good thing that we change jobs so often? Some good things about changing jobs every few years are that your pay remains competitive. I've worked with a person doing the same job that I was doing, and eventhough he'd been there for 11 years, he was only getting paid $1.50 more per hour than I was. The annual 3% raise isn't going to cut it in a changing and evolving environment.

Another reason changing jobs can be positive is that it keeps people more motivated to continue their education. If you are doing the same job day in and day out, you become comfortable and you no longer desire to stay current in various aspects of your field.

The third reason is that sometimes job changes allow us the opportunity to become what God designed us to become. It's just like a baby bird leaving the nest for the first time. That bird has to learn how to fly because the ground getting closer and closer is a great motivator. When we are given chances to change our jobs, we are also given the chance to spread our wings and fly.

The most important reason, in my mind, is that it keeps you from getting into a rut. Zig Ziglar said, "A rut is merely a grave with both ends kicked up." For anyone that has had a job where they were in a rut, you know that it is true. You know that you feel unfulfilled by the work you do, you aren’t happy going to work, you aren’t happy being at work, and when you lay in bed at night you dread having to wake up and do it all over again. Being in a rut crushes your spirit and robs you of reaching your potential.

Change

Change is a fact of life. It's not necessarily fun to keep up with change, but it is necessary to do so. If you do not keep up with change, then you will be left in the dust. In 5 years, about 85% of the products and services we use today will become obsolete. Don't believe me? Think back to when people used records, then 8 tracks, then cassettes, then CDs, now everyone uses MP3s. Or what about cell phones. I have a flip phone from 4 years ago and when I showed it in class, I got a couple of snickers because mine was only able to call people and take pictures. So you can see, everything changes and in order to keep up, you have to be constantly changing and evolving and keeping up with everything.

The rate of change is blinding. If cars had changed as much as computers in the last 25 years, you could buy a Rolls Royce for $2.98 that got 20,000 miles to the gallon. That's a little drastic, but you get the point.

In order to succeed, change must be anticipated. Wayne Gretzky explained how he did so well during games by saying, "I never skate to where the puck is, but where it's going to be." We need to anticipate the change so that when we're on the job market, we can show potential employers that we know what's going on. That we not only see the puck, but we know where it's going to be.

Power in Your Career

There are 5 keys to power in your career or vocation.

1. Look at Yourself. The more we understand ourselves the more we can move forward with boldness. Quit trying to be something you aren’t meant to be. Some of you may have had your parents tell you that you're going to be a doctor or a dentist. They always told you what you were going to be and it has absolutely nothing to do with your gift set. It has nothing to do with your passions or attitude and you got forced into it. It is a disaster for those people being forced into their parents' dreams.

2. Money is NOT a motivator: Money will not make you happy – YES think about money and return on investment, but it cannot be your motivator. The real motivator is meaning and a sense of purpose.

In the 1960’s UC Berkley did a rather interesting experiment. They hired a bunch of people who were out of work to dig a ditch. They paid them a fair wage which let’s just say was $5.00 an hour. They dug a ditch and halfway through the day they were told to fill it back in. A couple of guys asked why they were digging the ditch and were told that it was an experiment and that they were all just digging the ditch for no reason. The next morning only about 40% showed up. Because they showed up, their wages were doubled. Same thing happened. They dug a ditch, halfway through the day they were told to fill it back in. At the end of the day they told them all that they would double their wage the following day. Even knowing that their wage would be doubled…more than even a great wage for the day, only 40% of them showed up. What that means is that money wasn’t enough of a motivation for the people to do something that had no meaning. They couldn’t even mentally push themselves when they knew they were making no difference. There must be a sense of meaning and purpose and accomplishment. You have to feel like you’re getting somewhere and doing something. You have to be on fire about what you’re doing. Even when times are bad, you have a reason to keep going.

3. Don't just look at your abilities. Just because you have the ability to do something, doesn’t mean that it is well suited to you. This is the most common mistake in career planning. Don’t just look at ability, but at your direction and purpose. Just because I CAN take care of a whole bunch of kids that aren’t mine, it doesn’t mean that it’s something I SHOULD be doing because it doesn’t fit ME. You can do a job that you’re good at, but you hate it because you don’t feel that there’s meaning behind it.

4. You MUST be flexible. Be open to move things around. There’s an old saying that if you want to make God laugh, tell him your plans. Don’t be too rigid. If you are flexible and can go with the flow, but not just be a yes man or yes woman, then you are going to get ahead. Like everything else, plans change, you change. Don’t just feel like just because you’ve always been an accountant, you can’t change professions and become a cake decorator. You can always change and adapt to make yourself happy and to have a job that you truly enjoy.

5. You must find balance. Your job is just one tool for a successful life. You have to find a balance between work and play, but you also have to find a balance in the career you choose. There are 6 things that when they are all in balance, you will be happy and on fire about what you do.

If any of those are out of whack, then there’s a problem. If I am an excellent sales person and had a job in sales, then I would be able to use my skills and abilities of a sales person and I can exercise my personality traits of being a people person, that’s great. I can have dreams as to what I’ll do with all that commission, but if I’m selling credit cards, then I’m not going to be happy because it goes against my values because I hate credit cards, think they are evil and will never have one again as long as I live. Even though everything else lined up, it would go against my values to have a job like that.

So these 6 things are very important. When they are all balanced and present in a job situation, then you are happy with what you’re doing. You feel a sense of fulfillment.

Your Job is NOT Your Life!

Even when you have all 6 of those "must haves" you still must remember that your job is NOT your life - it is just one tool for a successful life. You do not derive your self esteem from what you do. All too often when men are asked who they are, they respond with what they do. They take way too much of their identity from their jobs, which is why a job loss is often accompanied by depression and anxiety. It is not only a huge blow to their ego, but they lose a sense of self. That is why it is so important to make sure to balance family, fun, spirituality, and your career. Instead of saying, "Hi, my name is Jim, I'm an accountant." you can say, "Hi, my name is Jim, I'm a husband, a father of 4, an avid bass fisherman, and I am the Young Men's President at church. Oh, and I'm also an accountant."

So we’ve talked about the keys to success, the importance of finding two different kinds of balance – balance in the type of job you have and balancing your personal time with professional time. All of these things are very important to discuss and think about. Really assess your current situation and see where you stand on these things. Now I’m not telling you to run out tomorrow and quit your job so you find something you really want to do. No…I’m saying to find out what you really want to be doing and then make a plan to make it happen over time.

Success

The things that have determined successful people are NOT driven by money. People who pick a job based on income are unfulfilled and even if their income is doubled they would still be as unfulfilled after the high wore off. Now success is not to be confused with wealth. Most times successful people end up wealthy because they are good at what they do because they love what they do, and in turn they become the best at what they do and end up in the top 2% earners in the industry. But the success is much more than wealth – it is fulfillment.

When I say personal style, I don’t mean wardrobe. I mean how you best function and where you best function. Understanding your personal style will tell you more about where you will function properly than your education. Education is great. I believe in education, but too often we think this is an automatic thing. Education has very little to do with blossoming in your vocation. You have to get your personal style into this. Someone who doesn’t like numbers and details shouldn’t become an accountant. Someone who doesn’t like people shouldn’t be in sales. You have a particular personal style. You were put together to do certain things – you just have to figure out what they are.

When we talk about attitude, it not only means how you view things, and how you treat others, it means that you have the "I will not be denied" attitude. I just love that. Those are the people who are ambitious, who get the job done. They are those who go and do, not sit and stew.

So now that we know what we want to do, where we want to work, and what characteristics are important for us to be successful in our endeavors, let's talk about that all important resume.

Resumes do not get jobs, they get interviews. The resume’s job is to only score an interview. You can look great on paper but be a mess in person and you will not get the job, even if you are more than qualified. In fact, the decision to hire you is made in the first 3-5 minutes of an interview. Many times, the handshake will make you or break you. No one wants to shake a cold dead fish. So, having an impressive resume is only half of the equation. On the other hand, you can be the perfect candidate for the job, but if you have a resume that is sub par, you will be passed by based on your resume alone.

You are in the parketing business when you are looking for a job. You are selling yourself. Don’t try to be someone you’re not! If it’s not a fit, just say, “You know, this isn’t a fit.” And that’s okay. You don’t have to take the first job that comes along. But there at least needs to be truth in advertising.

Customize every single resume to the position and company you are hoping to work for. Your resume shouldn’t only list where you’ve been, but what you learned where you’ve been and how it applies to this particular situation. Just customize every single resume, and your mission statement is to work for that company.

Have you ever been in a position where you were to wade through resumes? People put the craziest stuff on them, especially for their objective or “mission statement” that has nothing to do with the job that they are applying for. At one job I was filling my position once I had moved up and one lady put something along the lines that she wanted to have an orchard or be a tree farmer. She was applying for a legal secretary position. We had a good laugh, but the resume ended up in the shredder. If you take the time to customize your resumes, it stands a better chance of not going to the shredder or trash can.

When looking for jobs, you need to realize that only about 15% of the jobs out there are listed in the classifieds. Most people get jobs through networking, because they know someone who knows someone. When you're in the job market, you need to let everyone know that you're out there! Many times if you can come with a personal recommendation, you will land the job.

Now conversely, if you know someone is a lousy fit for your company, do not vouch for that person and put your name on the line. In business, your name is very valuable and you do not want to tarnish it.

A Different Approach

If you’re in the market for a particular job and you do not see or hear of any openings, then you can try to make one.

Target the companies you’d like to work for and contact them at least 3 times. First send out a simple introduction letter. Not a resume – just a simple letter saying that I’m about to be bothering you. Say something like, “I’ve identified your company as a really good place to hire me, and over the next several weeks, you’re going to identify me as someone you really want on your team.” Sounds arrogant? No, it sounds confident. You’re essentially saying I’m getting ready to market myself and will be pestering you (without actually saying it). You just tell them about you and that you will be sending them another cover letter with a resume.

Send a cover letter and resume. Now this resume should be tailored to the specific position and company. In the cover letter, tell them that you will be giving them a phone follow-up. Most companies are under 100 employees and so you’re resume isn’t going to end up in the trash. Now that they have your initial letter, cover letter, and resume….they are now expecting YOUR call…if for no other reason than sheer curiosity.

Call to follow up. It does you no good to be as bold as you’ve been and then drop the ball by not calling. You have people waiting for your call and they will take it when you do. This is the time to request an interview.

Be Persistent, not pushy. There is a fine line between pestering and being persistant. A lot of it depends on the type of job or company you are dealing with. If you’re trying to get a job in a high pressure sales industry, being very persistent is a very good thing. It shows off a marketable skill in that field. However, if you are an accountant and you pester the heck out of them, they’re going to think that you’re going to fret and worry about every single penny and it will drive them crazy.

Interview Etiquette

1. Be well groomed and clean. If you have poor hygiene, you will not get the job.2. Lay off the cologne and perfume. You do not know if the interviewer has allergies!3. Use breathmints right before the interview. You do not want to be sucking on one during the interview or chewing gum!4. It's better to be over dressed than under dressed.5. Shake hands firmly. No one likes to shake a cold dead fish.6. Make lots of eye contact. 7. Ask questions and look interested. Do some reasearch and have questions prepared to ask the interviewer. It will be impressive.8. Don't use words like, "Um" and "Like"9. Be direct in your responses. Don't get into long winded stories.10. Sit up straight.11. Smile. Don't look like the interview is the most painful thing you've ever lived through. Show those pearly whites!12. Let your personality shine through. Let them see the real you...but not too much of the real you. 13. Don't be afraid to tell the truth. If they ask you tough questions, it's okay to just tell the truth. If they don't like your answers, that's okay because that company isn't a fit for you anyway. 14. Practice before you go so that you can be confident.

After having been through many interviews and giving many interviews, I am continuously amazed at how strange people act during the interview process. They twirl their hair, lick their lips A LOT, they get the crazy look, and there's always that moment when you ask them if they have questions for you and you get the blank stare. "Um.....no, I think you answered all my questions." Or, there's that one question that always throws people for a loop. "What are your weaknesses?" Oh crap...you mean that I've gotta tell you that stuff?!? The key is to be honest, but spin your weakness into a strength by the time you finish your sentence. That way, you tell them the truth but put a positive spin on it.

Extra Jobs

Now that you have your dream job, let’s talk about the second part of raising your income, and that’s the second jobs. For some people, that’s tough. It’s tough to swallow your pride and take that second job. Sometimes it’s a tough, pride crushing decision to do what you need to do for a short time until you get into a better position. For a short period of time, sometimes you need to step down out of your comfort zone to take care of your family and to make things happen. I don’t want you to do this forever. I want you to do the things we’ve talked about, so these extra (second and third) jobs are just temporary.

Why get a second job?

1. To put food on the table.

2. To dynamite the log jam. Sometimes you just wouldn’t be able to get the emergency fund saved up or get that debt snowball rolling any other way. Second jobs do that….they get things rolling.

2. To pay off some small bills. Some of those $50 bills, those $100 bills, those little mosquito bills that you need to get off you. If you work for a couple months, you can knock a lot of them out.

3. To buy something you want. Since we are always paying for things with cash now (because cash has power!), sometimes we need a little more of it to save up for something we want. It can be a jet ski, a Harley, a new dining room table and chairs…whatever. That second job makes it possible.

4. To build a lump sum savings. Dave told a story about a man he met once and they had just found out his wife was pregnant with their second child. They had done everything right, but the budget was tight. They had been saving for their first child’s college education all along, but they just couldn’t find that extra $50 a month to send the new baby to college. Dave looked it over and couldn’t find anything and essentially sent the guy home without much help. 9 months later the couple came up to Dave with their new baby, and the wife said, “Dave, you won’t believe what this man has been doing for the last 9 months. He has been working 7 nights a week delivering pizzas. He has saved up $12,000 so that this baby can go to college. Now that’s a dad.

So what can you do for a second job? The list is endless but here are a few good ideas:Slinging pizzas Delivering PapersWorking Fast Food UPS / Fed ExCleaning Offices BabysittingTutoring WalmartRestaurants Mowing LawnsGrocery Stores Parking CarsHauling Scrap Metal Sitters for the ElderlyHouse Sitting Dog Walking

It doesn't really matter WHAT you do. The important thing to remember is that it is temporary and it is a means to an end.

Home Based Businesses

A second job doesn’t always have to be outside of the home. Sometimes it can be these home based businesses or cottage industries. It's something you can do in your living room, part time and on weekends until you can get it off the ground. Did you know that Dave started Financial Peace out of his living room? Yep, he started there, and just like you, the goal is to start there, start small, and then move further and further from the living room.

Avon, Tupperware, Pampered Chef, and all those other things people sell are also technically home based businesses. Now I will say that very few people do well selling these products. Many end up with a lot of inventory that no one wants. However, some do very well at it, so you have to look and see if this is something that is a passion of yours and if you won’t make all your friends, neighbors, and relatives mad by harassing them to order stuff.

Crafts, Cakes, Catering, or any other talent you posess can also earn you money. These can be done from your home too. I just started making hair bows and flower clips for little girls with hopes of selling them. It’s nothing major but it’s a little extra money. Same with cake decorating. I have started decorating cakes for profit lately – I’ve always known how to do it, but now I can make money off of it. It’s something I love and I’m good at. You have something you’re good at too…why not make some money off of it?

Additional Sources of Income (Quick Money)

Surveys. You have to be careful about where you go online but there are legitimate services out there. There is also a place in the Rivergate Mall called Quick Test. I worked there in High School, and NO it is not an AIDS testing center. (You have no idea how many people asked about that) It is a place where you can take surveys. Depending on the survey you can either try new products or earn money. They are also the people in the halls with clipboards that want to ask you questions. They might be annoying but they can earn you a few extra bucks or give you some new products to try. I have done surveys on trail mix, cosmetics, commercials (those pay!), bath and body products, and much much more.

Blogs. If you blog anyway you can add Google AdSense to your blog and maybe make a few bucks off advertisements. The down-side is that you do not get paid until you make your first $100. If you have quite a few readers then you stand a good chance of making some money.

Work at Home Jobs. Again, BE CAREFUL! Get information from people you know who actually do this. Chances are if your friend is getting paid without problems, then the company is legit.

Secret Shopper Work. See Rebecca about this one. She secret shops several places in the area and there's usually a free lunch and $5.00 (or more) involved.

Selling Stuff: Ebay, Craigslist, and Yard Sales. I have had great success with ebay, yard sales, and craigslist. Yard sales have been the dynamite to my log jam MANY times over.

Donating Plasma. This may not be glamorous, but if you need a few bucks to stretch till payday, then this is an option. It's not much but I've known many people who have done this and it's kept them afloat till their next payday.

Conclusion

Whether you have a career, vocation, job, or several jobs, when you are at work, work. Even if you aren't fond of your job, you can still do it well and learn to enjoy your work until you can formulate your plan and make it a reality. One thing that Dave tells his employees is that their raise becomes effective when they are. That is true at nearly every company. If you can become effective, productive, and an asset to the company, then you will get noticed and hopefully compensated for it.

We live in an amazing place and an amazing time, where we can do almost anything that we want. It's truly a time of opportunity, and all we have to do is sieze the moment. Dave Ramsey shared this in FPU and it really touched my heart. It's a poem by Dean Alfrange.

"I do not wish to be a common man. It is my right to be uncommon, if I can. I seek opportunity, not security.I do not wish to be a kept citizen,Humbled and dulledc by having the state look after me.I want to take the calculated riskTo dream and to buildTo fail and to succeed.I refuse to barter incentive for a dole.I prefer the challenges of lifeto a guaranteed existence.The thrill of fulfillment to the stale calm of Utopia. I will not trade freedom for beneficience,nor my dignity for a hand-out.I will never cower before any masternor bend to any threat.It is my heritage to stand erect, proud, and unafraid.To think and act for myself.To enjoy the benefit of my creationsand to face the world boldly and say'This I have done.'"

This is what it is all about. This is the American dream, and it only takes you to make that dream a reality.

Saturday, August 8, 2009

Welcome to the 6th session of All Things Financial. What we’re going to cover tonight is a fun topic (or at least I think it is) and it’s one that we all need help with. I even learned some new stuff as I was preparing this class, so this is some really cool stuff. It’s great because this is the one thing that YOU and only YOU can actually control in your budget. We’re going to be talking about...

Taming Our Grocery Budget *and for those in the class, I had a cool little picture with sound effect of a whip cracking. :o)*

Your grocery budget is the monthly expense that YOU can control. Sadly, most people do not control it. The average family of 4 in America spends $600 a month on groceries. Apparently food is the one thing we have a hard time lowering the budget on. If you see food as a necessary expense that you're just not willing to compromise on, then this is certainly a leson for you.

I am hoping to show you some ways to still eat well, without shelling out more money than you have to in order to do it. The first trick in taming our grocery budget is to create a menu or meal plan.

Menu and Meal Planning

For some reason when I say “meal planning or menu” people roll their eyes at me. My mom was telling me the other day that my dad wants them to do a menu and she was saying how much she hated that. Why? Because, just like a budget, people see a menu as a straight jacket – something to keep them from doing what they want to do. This is just not the case – or at least it doesn’t have to be. Menu might be a 4 letter word, but it’s not a bad one.

So, let’s look at Why we plan meals. We plan meals to save time and money at the grocery store AND at home. When you plan your meals ahead of time, you cut out a lot of time wandering around the grocery store going, “this looks good” and “this looks like something we’d eat” only to come home and realize that you don’t have anything to make breakfast with, or that you only have parts of meals. You also save a lot of money because those impulse buys just don’t fit into your plan.

There are 2 different ways you can prepare a menu.1. Set a meal plan that is set in stone. This is what we do. It works best for us because we like things very cut and dry. I like to know exactly what is going on and when.2. Create a list of options and choose from it. This is right up the free spirit’s alley. Yeah, there’s a choice and some “freedom”. If you have always viewed doing a meal plan or menu as a straight jacket, then this is probably the best option for you.

So, let’s look at the difference between the two different styles.

A Set Meal Plan

Pros:1. You do not have to go through the "what do you want for dinner" routine. My hubby and I are BAD about this. We will sit there and spend 30 minutes trying to figure out what we want to eat, when it would have taken me less than that to just fix something for us to eat. It’s just so silly how much time is wasted trying to figure out what to have for dinner, or breakfast or lunch.

2. You know what you're having for dinner ahead of time, so that you can prepare. If you have a plan, you can pull something out to thaw that morning or the night before. You can start the crock pot, you can get things going when you have the time to get it started. It also gives you time to get excited about the meal. Sure, it’s spaghetti – AGAIN – but maybe you can think about what spices you can add to pep it up a bit.

3. Gives you a plan to utilize all the leftovers in upcoming meals. We are big on this. As a recovering vegetarian, I am not a big fan of cooking meat. I just hate to do it, so the fewer times I have to handle something raw and dead, the better. So, I cook meat maybe a couple nights a week – just a big bunch of it. Since I’m cooking it anyway, then I might as well do it big and use the rest in upcoming meals.

4. You can base your entire menu around sales. This is a great thing because you are controlling your grocery budget and getting the best deals possible. You aren’t paying full price for something you can get for less….and that’s always a good thing.

Cons:Well, there are a few down-sides, depending on how you see things. I don’t mind them much, but some people might.

1. It doesn't allow for much variation or change in the meal plan since the meals build off of eachother. Some people like to have that surprise factor to dinner, and that’s okay. Some people don’t like to sit and think about a particular food all day because then they don’t want to eat it when the time comes. So, if you find yourself in that category, then this might not be the system for you.

2. It requires creative use of leftovers. Yes, leftovers – another bad word. I used to be one of those people who would not use leftovers because it was “gross” or I just didn’t want to eat the same thing again. So, when you use a set meal plan, you have to be more creative when it comes to using what you have.

3. You might hear grumblings from family members that they want something else for dinner. Again, everyone is different. My hubby will eat anything thrown in front of him, so that’s good. However, you may have a family that would grumble about this whole set meal plan thing.

A List of Meal Options

Now, if you choose to go the other route – more of a menu or list of meal options, then you can certainly do that. There are some good qualities of doing it this way.

Pros:1. You can pick and choose what you want to eat. It let’s you feel more free to make your choices as to what you want that night. It lets you have the ability to change things up based on your mood.

2. You can base your menu around the sales. Like the other option, you can get some amazing deals by planning your list of options around things that are on sale.

3. You are still able to plan your meals without feeling restricted. I think the main reason this is appealing to some people is that they still have freedom. Even though they are the ones planning the meal plan to begin with, they still like being able to pick and choose – as they would at a restaurant (although everyone has to eat the same thing). This is especially good if you have a finicky spouse or kids who like to change things up a bit.

There are some down-sides to this type of plan too…

Cons:1. It's more difficult to utilize leftovers. When you are flying by the seat of your pants, if you will, it’s less likely that you will use leftovers. Now if you hate them and won’t use them anyway, then that’s just fine by you. However, you can expect to pay more to feed your family than someone who uses leftovers. So, this can affect the bottom line in the grocery budget.

2. It leaves room for indecisiveness over dinner. This does not remove the 30 minute conversation about what to have for dinner. You still have the potential to waste time talking about what you should have, what everyone wants, and coming up with a compromise.

The most important thing to remember is that there is no right or wrong way to plan your meals! There are no cookie cutter families, and what works for one, might not work for another. You may have other ideas about how to make a menu or meal plan work for your family. You might have to tweak this a bit to get it right. The important thing is that you do it, and by doing it, you will save money on groceries.

The Dos and Don'ts of Making Menus

Do: Pick meals that your family will enjoy eating. Don't: Pick meals that are cheap but you'll have to fight your family to eat.

Seriously, don’t think that your family will be okay with eating Ramen 2 nights a week, beans and rice 3 nights a week, and spaghetti as a special treat 2 nights a week. It’s not going to fly and you’ll have an uprising to deal with. Your family will rebel and will go on strike. So, make sure to plan meals that you all enjoy. Feel free to branch out and try new things – there’s no harm in it, just make sure that you plan to have a couple PB&J back-up sandwiches if the experiment goes very wrong.

Do: Be very specific and list ingredients needed and the amounts needed.Don't: Just try to wing it and guess how much stuff you will need.

It becomes a science, and then it becomes a very easy task. By knowing that you get 4 salads out of a head of lettuce and you need 12 salads over the next 2 weeks, then you know you need to buy 3 heads of lettuce. It makes it simple when you are at the store, so be specific as to what you need and how much.

Do: Look at the sales ads and base your menu around things you can buy on sale or with coupons.Don't: Let your menu dictate how much you will spend. You can't have caviar taste on a beans and rice budget without getting good deals.

I know I keep saying this, but it is really important. You can cut your grocery budget by just shopping with coupons and sales ads. You really can! It does take time and some effort, but the savings will be worth it. By doing this, you take the power back. The grocery store no longer has the power, YOU have the power because you are saying what you are willing to pay for _____ item for your menu. If it’s more expensive than you like, then you can change your menu to something else until it’s on sale.

Do: Use your leftovers.Don't: Get caught in the trap of saying you don't like them or planning on using them but never actually doing it.

How many times have you put leftovers in the fridge with every intent to use them, but then you realize that it’s been there for 3 weeks and is looking like a science experiment gone wrong? I have been guilty of that. When you have a meal plan, you PLAN for leftovers so there are no more mystery containers sitting in the back of your fridge.

Do: Look in your pantry, cabinets, and freezer and incorporate what you have into your meal plan.Don't: Keep buying new food without using what you have.

If you have 10 lbs of frozen ground beef, then there is really no reason to go buy some more because you just didn’t bother to go spelunking in your freezer. If you have some old cans of cheese soup from who knows when or why, and they’re still good…then come up with a meal that uses them (cheesy potato soup is a good idea) and then base your meals around that. This is also a great idea if you’re having a slim month and just don’t have a lot of money to go around. It’s amazing what kind of creative meals you can come up with once you center things around what you already have.

Do: Make a shopping list of the items you need to fulfill the menu.Don't: Expect yourself to remember what you have to buy for each meal.

Seriously, you will NEVER remember everything that you need to buy if you don’t make a list. I like lists a lot. Why? Because it keeps me out of the aisles I don’t need to go down, keeps me from buying things I don’t need to buy, and helps me remember to buy the things I DO need to buy. Lists are wonderful things.

Do: Make sure to use everything that you buy.Don't: Under plan how much you need.

Again, do the math and get this down to a science. The objective is to not waste any food (unless it’s a new recipe that just tastes like sweaty socks), thus saving you money…..money that can go towards other things (like paying off debt, building that savings account, retirement or college funding, or heck….even a new pair of shoes!)

Always be realistic. If you have a family of 4, you are not going to get by on 3 chicken breasts for 2 weeks when you plan 4 meals a week with chicken. You might be good, but you aren’t that good. :o)

Shopping Based on a Menu

So, let’s talk about the actual process of shopping based on a menu.

Make a list of the items you need to complete the menu. If it's not on the list, don't buy it. Man, that will save you a bunch of money right there. Because about 20% of our grocery spending consists of things we do not need but buy because it looks good or we think we could use it. How many times have you walked through the aisles (without a plan and shopping list) and picked up things that you didn’t need, that you didn’t even know existed before you walked by it, but all of a sudden, you had to have it. When you stick to your list, you don’t even pay much attention to that stuff anymore.

Buying only what we need cuts down on waste. You will be amazed at how much less trash you have when you are going through this process. We used to fill our trash can to the brim every single month (with the occasional bag or two on the side) and that was with 1 in diapers. Now we have 2 in diapers and we don’t even touch the top of the can anymore. We have cut out so much food waste. We aren’t throwing out entire containers of yogurt because we didn’t eat it before it expired. We aren’t tossing out rotten heads of lettuce, moldy ricotta cheese, black bananas. We are eating the stuff while it’s still good and fresh, and we’re not throwing our money away. Just think about some of the stuff you’ve had to toss because it spoiled before you could come up with a plan for it.

Another great benefit of menu based shopping is that you are able to cut out a large portion of the unhealthy foods. We still buy the occasional snack food or popcorn, but when we know that we’re going to have pretzels and peanut butter for a snack one day, and carrot sticks and ranch dressing as a snack the next day, the need for fruit snacks, chips, cookies, and other things like that goes away. We are able to plan our snacks in our menus, and we don’t have to rely on the less healthy choices.

Using a shopping list based on a menu will save you a lot of money each visit, especially if you use coupons and sales ads to your advantage. You will be amazed at how much money you save. It will make you think about your purchases more, you will be more focused, and you will be able to get more for less.

1. Buy in bulk, but ONLY if you actually NEED it and it's a good deal. Factor in membership costs. I was guilty of that several years ago. I had a Sams club membership and bought more stuff than I knew what to do with. Yes, 1000 fruit snacks for $5.00 is a great deal, but really…one person can only eat so many fruit snacks. Be realistic about what you’re buying in bulk, and make sure you’re getting it at a good price. You also need to factor in the membership costs. If you shop there once a month and the membership cost is $40, then you need to add $3.33 to your total each trip. So, if you only go to buy toilet paper, then add the $3.33 and see if you’re still getting a good deal. Watch the prices. I have found on a couple occasions that buying the bulk package was actually more expensive than buying the smaller sizes. So you have to pay attention!

Jessica (one of the gals attending the group meeting) mentioned GFS Marketplace in Rivergate. She explained that you can buy things in bulk (especially good for entertaining and parties) without that pesky membership fee.

2. Use coupons and sales ads. Yes, I know…broken record, but I cannot stress this enough. If you save $10 off a $200 grocery bill, you’ve just saved yourself 5%. That really does add up!

3. You HAVE to know your prices. It’s amazing that I saw a “sale” price of the TP we use all the time - $9.99. Um…hello…I can get the exact same TP on sale sometimes for $5.00! That’s not a sale. Actually, yesterday I saw that Fred’s has 5 for $5.00 Elmer’s School Glue (4 oz). Walmart has it on sale for $.25! Seriously, that’s a savings of $.75 just by knowing my prices!

4. Consider buying veggies and fruits from local farmers. You can get some amazing deals at the roadside stands or farmer’s markets. In Portland, we have a ton of people selling fresh produce and you can get amazing deals on some really great tasting produce. Or better yet, plant a garden. We planted our first garden this year, and we have been amazed at how much we’ve gotten from it. It did take some money to start up, but next year it won’t be nearly as much and we’ll make that back in no time. It’s a great way to save money.

5. Buy frozen instead of fresh. Fruits and Veggies are flash frozen at their peak of freshness, and especially if you’re cooking them anyway, you will save a ton of money and not even notice the difference if you buy frozen. I love buying frozen fruit for smoothies – I don’t even need ice because the frozen fruit works great!

6. Avoid pre-packaged and convenience foods. You will pay 25-100% more for these items. Those little individual bags of chips are great, but you can buy twice as much in the big bags for less. The 12 packs of the chips are on sale for $6.00 this week. You can buy 2 big bags of the same chips and get 12 baggies (or more) out of them for about $3.00. Yes, there’s the cost of the baggies, but still…you’re saving money and you can be cheap like us and recycle the baggies. Those frozen lasagnas aren’t nearly as inexpensive as making your own. I can make 2 for the price of 1 frozen one (and I get to control the ingredients).

7. We talked about this a couple months ago, but buy generic instead of name brand stuff. The same people who make cheerios make the generic brands too. It’s the same stuff minus the brand recognition.

8. Check the clearance racks. Clearance doesn’t mean stale or nasty. Infact, I have gotten amazing deals when things are on clearance. 2 weeks ago I hit the macaroni and cheese mother-load – 38 cents a box (as opposed to $1.00 a box or even $.50 a box on sale). It’s good until June of next year. Nothing is wrong with it – it’s just cheap. A couple months ago, I hit Target as they clearanced out a bunch of Huggies diapers. I picked up boxes that normally run for $28.88 for $13.88. That’s a HUGE deal and I almost cleared the shelves buying so many.

9. Leave EVERYONE else home while you go shopping. If you want to save money, shop alone. Even with a list, I will still spend more money if hubby or the kids go with me. They just know how to whine and suck the money right out of you because they see something they just HAVE to have! My kids and hubby will wear me down that I give into buying that stupid box of crackers or the hot wheels car, just because it's easier to say yes than to argue my point for the 100th time.

10. Shop with a calculator. If you know exactly how much you’re spending you can make wise choices. You know that you have a limit, and when you start reaching that limit, you can make choices and maybe put back those impulse purchases or the non-generic things you were going to buy.

11. Pay with cash only. It will save you at least 12% (and up to 50%) when you set the limit, not let the price set your budget. If you go in with $100, you leave with only $100 worth of stuff. You will make smarter choices knowing that you only have so much money and that you cannot go over that amount. People don’t believe me on this until they do it themselves. Just last week, one of the gals I help online said, “wow, I didn’t believe you until I did it myself. I came in $30 under budget and got everything I need for the next 2 weeks.” You WILL come in under budget if you shop with cash only and use that list and calculator! See...I'm not completely full of hot air.

Stretching Your Dinner Dollars

So, now that we have our food, let’s talk about stretching your dinner dollars! These are just some tricks that I use to make the food we do have go just a little further, without us feeling like we’re deprived. Some of these may work for your family, some may not, but the point of this is to get you thinking outside the box.

1. Fillers: Add bread crumbs, rice, potatoes, veggies, and/or beans to meals to make them more filling. We actually enjoy our food more with the fillers I mentioned. We love adding some Mexican rice to our taco meat because it gives it a little something special. We enjoy the taste of hamburgers with Italian breadcrumbs added into the mix. Sometimes the fillers just make it taste better. Instead of using a pound of hamburger meat, we use a half pound of turkey (or hamburger) and with the fillers making up the rest of the volume, we still get as much food.

2. Cut up your meat. This may seem like it’s not that big of a deal, but if you want to make the meat you eat stretch further, this will help. I’ve been a recovering vegetarian for 4 years now, but I’m still not a big fan of slabs of meat, so this is perfect for our family. As an experiment to test my theory I cooked 4 chicken breasts and decided to see how far I can make them stretch. We have 3 (sometimes 4) people who will eat chicken in our house. Our oldest is picky and will occasionally eat it. So, if we had taken those chicken breasts and made them the center of our meal, we would have gotten 1 meal out of it (2 for Jon, 1 for me, 1 for Spencer and Hunter to share. We know that’s how it would have worked because we’ve done that before. So, instead of the big slab of chicken we shredded and diced it up. That night we had fettuccini alfredo with chicken. The next day for lunch we had a chicken spinach salad. For dinner the next night we had chicken quesadillas. Yes, we got 3 meals out of 4 chicken breasts, and fed 3 people (Hunter just wasn’t feeling the chicken thing). So really, it does help to cut the meat up.

3. Make Smart Substitutions. For us, since we enjoy a lot of things with ground beef, the smartest substitution we made was going to ground turkey.

4. Cut portions. Americans generally consume too much anyway, so look at what a serving size really is. If you portion out your meal you will find that you will still get full and will have more food left over, which if you’re trying to shave down the grocery budget is a good thing.

5. Use smaller plates. I can see you all kinda thinking I’ve lost my mind. I see it. It’s alright. I'm essentially telling you to use smaller plates because they less food. I don’t know what it is, but for some reason everyone likes to see a nice full plate. Some people like to PILE up their plates. I don’t know what it is, but a full plate makes you think you’re getting enough food. Well, when you have a bunch of surface area to cover, you’re going to have much more food on the plate (and chances are some will go to waste). If you have a smaller area (but still a big plate), then you can fill it with less food, but still give off the illusion that you have a ton of food on there. We switched to these plates, cut our portions in half and hubby never even noticed that he was eating less food.

6. Don't leave the food on the table as you eat. I know a lot of people like to put the pans and pots on the table so everyone can help themselves, but because our brains and bodies don’t sync up when it comes to feeling full, we tend to over eat. By portioning out the food and leaving the extras out of sight, we can focus on what we’re eating, let our bodies and minds figure out if we’re full or not, and 9 times out of 10 you will have more leftovers than if you had left the food on the table.

7. Serve water - not soda at dinner time. Oh I know…what a horrible person I am. :o) Seriously though, by drinking water during a meal, you will not only feel fuller faster, but you will be able to actually TASTE your food because it doesn’t have to compete with the sugary drinks. It makes the food taste better and because you enjoy your food, you are less likely to want to snack and pick at things later on. Plus, sugary drinks and sodas are expensive anyway.

Well, I know some of you have been sitting here saying….oh this is all well and good, and I’d like to do all those things, but

I Don't Have Time To Cook

To that I say, you don’t have time NOT to cook. On average, one person can expect to pay about $10 for eating out at a sit down restaurant. They will spend on average, $4.50 at a fast food restaurant. By cooking your meals and avoiding the convenience foods, you can cut your costs down to $2.00 per person (or less!!!). That’s a minimal savings of over 50% right there! You just have to make smart choices and you can have a tasty and very inexpensive meal.

Learn to love your crock pot. Crock pots are not only great for roasts, but you can cook up some super yummy things in there! You can make enchiladas, lasagna, soups, bbq ribs, sweet and sour chicken. Oh the possibilities are endless, and the best part is that you can start it when you leave for work, and thanks to timers and such, it will be done and hot when you get home. Talk about a time saver (and money saver because you won’t be tempted to just pick up something on the way home!)

Learn how to make freezer meals! I have just started to learn the joys of freezer meals. These things are wonderful time savers (and energy savers). With freezer meals, you have the potential to do prep work only one day a month, but enjoy the benefits every single night. And if you don’t have that kind of room in the freezer, doing it once a week, or even twice a week will certainly lighten your load and keep you from impulse buying that pizza or KFC.

Freezer Meals

Almost any dish can be frozen and re-heated. The major exceptions are sour cream, cooked potatoes, and blocks of cheese. These things are safe to eat if frozen – the texture just changes. Sometimes you will have to experiment with different recipes. Sometimes it’s just easier (and better tasting) to make the sauce and freeze it, or make and freeze only part of it. One such recipe are stuffed peppers. I think freezing the peppers with stuffing in them isn’t the best thing in the world, but freezing the stuffing and then filling fresh peppers is. So, do some experimenting.

Oh yummmmmm….they sound so good. We make a lot of these for freezer meals. I will make a double batch – eat one that night and freeze one. That’s especially true for pancakes and waffles. I will even triple the waffle batter and make a ton of them just to freeze because the kids love them and I hate cleaning the waffle iron.

Where did I get freezer meal recipes? Most of them are just recipes I have for regular things that I just throw in the freezer. Some of them came from 30 Meals in One Day (no, I do not own it, I just use the free sample recipes) and some Kid Friendly Freezer Meals, and I am also a member of a group on CafeMom called The Once a Month Cooking Club, and there are some great recipes in that forum.

So really with crock pots and freezer meals, it’s so easy to make yummy home-cooked meals – even for very busy people.

The next thing I hear from time to time, and I used to say it myself was…..

But I Don't Like Leftovers

Leftovers can be more amazing than the first go-round. The faster you eat them, the better they taste. And no, I don't mean shoveling them into your mouth faster. If leftovers are a week and a half old they aren't going to taste that fantastic, but if you eat them the next day or the day after that, they can sometimes taste even better because the flavors have had a chance to meld together.

Find creative things to do with leftovers. We eat leftovers like no body’s business, but I like to give it a new life. I mean, who wants to eat the same thing for 3 meals in a row? So, I try to find something interesting to do with them. One great idea I got from one of my favorite books (and it’s saved me quite a bit of money) is Haley’s Hints. In it, it talks about a creative use of leftover mashed potatoes. You simply roll them into balls, dip into egg, dip into breadcrumbs and bake. How yummy does that sound?!? Way yummier than 2 day old mashed potatoes. If you can’t change the actual food, change the way you eat it. We make this layered hot wing dip stuff, and it’s great, but we’ve had to come up with new ways to eat it or else we get sick of it. The first night we use tortilla chips to eat it. The next we use soft tacos and sprinkle on lettuce, tomato, and sour cream. The third night we do hard tacos (if there’s any left). It’s all basically the same thing, but changing it up keeps it more interesting.

If you learn to like and use leftovers, then you will save a lot of money. For an $8.00 meal (the hot wing dip) we get 4 people fed for 2 sometimes 3 meals. That comes out to about $.67 - $1.00 per person per meal. That’s not too shabby. If we didn’t eat leftovers, it’d be a $2.00 per person meal. By trimming $1.00 off each meal, you’ll save $90 a month! That’s why I advocate the use of leftovers like no-body’s business!

How Can We Build Food Storage?

Another skepticism about meal planning (especially among LDS people) is "If we are buying only what we need, how can we build up our food storage?"

My answer to that is, "By buying what you need, when you need it, you are saving yourself money. Whatever money you save on your regular groceries can go towards building up your food storage. We have built up about a 6 month supply of everything we need BECAUSE we followed a meal plan. If we were still sticking with our old shopping habits, we would still have 10 lbs of rice and that’d be about it. Think about it. If you have $400 a month for groceries and you can cut it down to $300 by meal planning, that gives you $100 a month to get that food storage built up (or to pay off debt, or build savings).

Some other ways to build up food storage while on a tight budget is to:

1. Look for free samples. We talked about that a couple months ago. Those things really add up and are fantastic for 72 hour kits.

2. Use coupons and learn how to play the CVS and Walgreens games. Again, this is something we covered a couple months ago. These are great ways to not only save up money, but we have close to a year's supply of all toiletry items we could ever need.

3. Stock up using teh B1G1 sales. If you're planning on buying one anyway, the free one can go towards food storage. I just did this tonight. We had an extra $60 in our grocery budget this month, so I stocked up on B1G1 Peanut Butter at Publix and now I have a year's supply of peanut butter. Talk about great deals. B1G1 deals are the way to go.

4. Hit clearance racks. Again, clearance food doesn’t always mean it’s bad. Sometimes the product is being discontinued or maybe the box is changing. Either way, you can get some great stuff for pennies on the dollar on the clearance rack.

Am I saying that you can never do it again now that you have a meal plan? NO WAY! There is nothing wrong with eating out, as long as you budget for it.

Plan ahead and don't plan a meal for the one you'll be eating out, or else you'll have paid twice for that meal (one at home and one out). If you know you’re going out to eat on Friday night, leave that space blank on your menu. It will save you money because you won't have the expense of that food sitting around.

If you do decide to eat out, I want you all to remember what we talked about before. You do NOT have to pay full price for ANYTHING! There are so many ways to save money at restaurants that it’s not even funny. What are some things you can do to cut the price of eating out?

1. If you have a favorite restaurant, sign up for their clubs - you will recieve special coupons and promotions by doing so.

2. Look for coupons in the paper, in the mail, and online.

3. Share meals instead of ordering your own. Most meals are big enough for two people to share.

4. Order off the kids' menu to save some money. Usually the portions are just the right size to fill an adult. Not all restaurants will let you, but many will.

5. Eat at places and times when your kids can eat free with the purchase of your adult entree.

6. Sign up for birthday clubs. Most of the time you will get a free meal, dessert, or appetizer on your birthday.

7. Learn who has the freebies!

Who Offers Freebies?

Arby's - every Wednesday (through the end of August) there is a free item when you purchase a certain item.

Mimi's Cafe - Print a coupon for a free dessert on the homepage. Join the club for more savings. Also, if you tell them it's your first time eating there, they will give you 4 free muffins to take home with you!!!

Smokey Bones BBQ - Sign up and get a $10 off coupon (might not be free but half price isn't bad!).

Lonestar Steakhouse (Bowling Green) - Kids eat free on Tuesday.

California Pizza Kitchen - sign up and get a free kids' meal on their birthday (pizza and dessert).

ANY restaurant that you enjoy eating will have special coupons, promotions, and/or gifts for joining their clubs. Sign up and you may be surprised at what you get.

A Warning!

Just because you have a coupon, it doesn't mean that you need to use it. Why do you think restaurants give you all these freebies? Because they know that you will most likely go in with several people and you will spend money. Just think about it. If your hubby knows that you're getting a free meal, he may be more apt to say, "Well, I'll get a bigger steak than normal because her meal is free." This is part of their game, and if you play it properly you can win. If you fall into the trap, then they will win.

Sometimes it's a good idea to claim your goodies by yourself or with a child who can help you eat your freebies.

Another great way to save some money - especially with all those free birthday kids' meals - is to go to the drive thru of the fast food places and get 1 meal per kid. For example if we go to Zaxby's that's one meal for one child. Then we'd go to Sonic, that's another meal for another child. Then we'd go to burger king, and that's a 3rd meal, for a 3rd child. Hey....we just fed all 3 kids on all 3 birthdays. Everyone wins.

Another thing to remember is that you need to watch the wording on the coupons you plan on using. Many times the coupon will say, "Not valid with any other promotion or offer." That means that you cannot use a $5.00 off coupon if you order something that has a special promotional price. So be careful and watch the wording on coupons. Some may even say that it's not valid on a certain day or at a certain time.

Why Is This Important?

Why do I care what you spend on groceries? Well, to be honest, I care because I hate knowing that people are spending their hard earned money on something that they can get for less. It constantly amazes me when I see people go from $600 a month for groceries to $300 because they made these changes to how they looked at it.

I’ve been there. I’ve done that. I have been guilty of spending over $800 a month on groceries and eating out (I went back to old bank statements from my previous marriage). Isn’t that disgusting? 2 people - $800 on something that ended up in the toilet the next day. I’m sure I had some good meals. I mean, I enjoy the melting pot as much as anyone, but really…I can melt cheese and chocolate at home for much less.

When I finally woke up and realized….it’s just food, I was able to start prioritizing where my money was going. I stopped caring about the brand. I stopped eating so much junk food. I stopped buying convenience foods. I decided to take the control back and set my limits and not let the grocery store control my budget. Let me tell ya….it’s a very liberating experience. We have stopped going out to eat because it’s just not important to us. When we do go (for our freebies or when our parents take us out) we usually get sick because we’re not used to that type of food anymore. You not only go through a mental transformation, but you go through a physical one as well. You learn what is important, you are able to feed your body the right things – and stick to the WOW (eat meat sparingly). It’s a really cool thing, which is why I wanted to teach this.

What kind of things could we do if we were all able to cut our grocery budgets in half? What kind of financial relief could we have? How much debt could we pay off? What could you do with half of your grocery budget?

This is all about taking back the control. It is about being tuned in and paying attention. It’s about keeping more of the money you work hard for, so that you can enrich your family’s lives.

How Low Can You Go?

Just to kind of change things up a bit, we are playing a game called, "How Low Can You Go?"

Objective:To see how much less you can spend by meal planning. Eat what you normally would eat, but incorporate what we talked about into your shopping trip.

Two winners per week will be chosen and will receive award(s) at next meeting. Enter via email or give it to me on Sunday.

The Rules of the Game:

1. No cheating! Don’t fudge on the prices (I know them very well!)2. No using only food storage. Treat this as you would a normal shopping trip. Many of us could not buy a thing for months, but this is to see how low you can go with your NORMAL eating habbits by implementing the things we talked about in this lesson.3. Use form provided (or make your own) and any attachments if necessary. Please feel free to make something or even just write down the information on a sheet of notebook paper. Just make sure to include the date, the type of meal (breakfast lunch dinner), what the meal was (i.e. meatloaf with mashed potatoes and gravy with biscuits), and how much it cost you per person to make it. 4. Winners will be chosen based on price per person figures not total cost of purchases or total cost of the meal.5. The following items do not count toward your total: salt, pepper, spices, flour, and sugar. All other ingredients count.6. Must include eating out on your totals – bill total (including tip) divided by number of people in your party. So you cannot go order a salad while the rest of the family eats steak and expect that to count. :o)

Saturday, June 6, 2009

Well, the last lesson was the most fun and entertaining lesson, which is sad that it has to be followed up by this lesson. Yes, this is the Understanding Insurance and Estate Planning lesson, and this is hard for me to teach. It’s hard because there’s absolutely nothing fun, entertaining, or exciting about insurance or estate planning….and it’s my job to teach you this stuff in a fun, entertaining and exciting way. Boy have I got my work cut out for me.

First I want to start by saying that I do not sell insurance, I never have, I never will. I am not licensed, nor do I have any stock in any insurance agency. I don’t even know anyone who sells insurance. So, all that just to say, that I have no vested interest in telling you any of this stuff. I just want to give you the best information that I can, and let you make your own informed decisions.

So, let’s look at insurance. That in and of itself can be a scary thing and it can be full of traps and a lot of holes to get our foot stuck in. So I’m going to try to iron it all out for you so that you can spring the trap and finally understand insurance.

First, never buy anything you don't understand. This is something we talked about in our last class. Chances are, you bought your insurance policies without fully understanding them. Insurance and Investments are the 2 areas where people think they know what is going on, but really don’t. So, just sit tight and we’ll work through it.

It will absolutely steal your financial peace if you do not understand insurance. This insurance stuff is a major deal. This is big, this matters. If you understand your insurance and make sure you’re covered, then it will get you some financial peace. If you do not understand your insurance then it will rob you of financial peace – and sleep at night.

So, what is the purpose of insurance? It transfers the risk of a loss from you to the company. So instead of us having to foot the entire bill if some moron rear-ends us at a red light, by having insurance we are transferring the risk to the insurance company. And if we so happen to be that moron that rear ends someone at a red light, then we are covered because we transferred the risk to the insurance company. I think we can pretty much all agree that insurance is necessary.

However, how many of you hate insurance? We know insurance is a good thing, but deep down inside of us we have this nagging feeling that something is wrong. And it is. Most of us have been ripped off by insurance companies for far too long that it’s just the norm.

Well that ends tonight! We are going to remedy that situation entirely and put you in control of your financial future and in control of the insurance you purchase.

We are going to be discussing 6 types of insurance. The first is

Homeowner's & Renter's Insurance

If you rent a home or apartment, you need renter's insurance. It is so inexpensive to get renter’s insurance, but it is necessary. You of course can control what you do, but you cannot control the idiots who live in the same apartment complex, who fall asleep while smoking a cigarette and burn down the entire complex. So, get renter’s insurance…it’s so important to have.

If you own a home, it's important to have guaranteed replacement cost insurance. Replacement cost means that they guarantee to replace your home no matter what happens. Most of the major companies no longer have guaranteed replacement cost – they switched it out. What they’ve done now is that they put a dollar amount on it (your coverage plus 25%). Let’s say you bought $100,000 worth of a home, and if in 10 years it’s worth $175,000 and you never bothered to change it. You only have $125,000 worth of coverage. If it burns, you’re $50,000 in the hole. Never buy anything that doesn’t have guaranteed replacement cost insurance. Most of the large ones do not offer it. If yours doesn’t, consider changing. This is a big deal. If you get a great deal from your company and cannot find one to switch to, then you need to make sure to increase your coverage based on property values and rate of inflation EVERY SINGLE YEAR!

You also need to carry adequate liability - about $500,000. If someone falls on your property and sues you, they are not going to sue for a couple thousand. They aren’t even going to sue for $250,000…they are going to sue for $500,000…..why because a half a million sounds better than a quarter million.

An Umbrella Policy. For a couple hundred bucks a year, then you can get about $2 Million more of liability if someone falls against your car in your driveway. If someone were to do that, your home and auto would kick in, then after that is exhausted, the umbrella policy kicks in to cover you. You want to have this kind of insurance in place when you really start building some wealth. If you have $200,000 or more worth of paid-for stuff. Once you start getting some assets, you become a big target in our sue happy culture. Once you have assets, you need to transfer the risk to insurance companies and put them between you and the moron who wants to sue you. There are also other ways to keep your assets out of the reach of sue-happy people…we’ll talk about that in estate planning part.

As we talked about last time, just because you need something doesn’t mean you have to pay whatever your insurance agent tries to sell you. There are ways to save money. If you have an emergency fund, it is certainly okay to raise your deductable. It will save you quite a bit of money because you are taking on more risk, which will potentially save the company some money, thus you get lower rates. Another thing you can do is to get your homeowner’s insurance through the same company you get your auto insurance through. You not only get a discount on home, but you get a discount on auto. The third and most profound way to save money is to shop around. We had been with Allstate for 3 years. I had no problems with them, until they increased out homeowner’s policy premiums 2 years in a row. In 2 years, the premiums increased by $220 and we had no claims. I began shopping around and we finally settled on Farm Bureau Insurance. They were able to give us better coverage for $332 less a year, and from what I understand, they usually do not raise premiums by as much as the other larger companies do. But even-so, a $300+ savings a year is worth shopping around.

The second kind of insurance we’ll be focusing on is...

Auto Insurance

In Tennessee it is the law to have car insurance, and the minimum coverage requirement is way too small to protect you, so carry adequate liability insurance. Again, people aren’t going to sue for $100,000….they are going to sue for $500,000. Liability Insurance is the best buy in the insurance business. You should at least carry a half a million dollars minimum. So transfer the risk to the insurance company so you don’t end up bankrupt.

Some ways to save money: You can increase your deductable. In order to figure out if it’s a good idea for you to raise the deductable, you need to do a little math. Take the difference (let’s say you’re going from $250 deductable to a $1000 deductable. So that’s a difference of $750. That’s $750 extra risk. If it only saves you $30 a year, then it will take you 25 years without a wreck to break even. But if you save $250 a year, then you only have to go 3 years without a wreck to break even. That might be a better deal. Just do a break-even analysis. Are you getting enough savings in premium to justify incurring that risk.

On an old car, drop the collision. If you drive a $2000 car and it costs you $400 a year for insurance, then you might want to drop the collision to save you some money. Now don’t drop collision before you have some cash saved up because if you wreck that thing, and it’s your fault, then you’ll be without a car if you can’t pay for the repairs or to replace it. If you have some cash saved up, then you can drop collision. We do not have collision on my husband’s truck. It’s worth about $2700 and needs a new transmission. We can easily be a 1 car family if we need to. We ran the numbers and we couldn’t justify the increase in premium when he drives a half mile to and from work a day, and if the car were to be destroyed, we just wouldn’t care that much.

Again, shop around. By shopping around we saved $120 a year on auto by switching.

Health Insurance

Health Insurance is a MUST! If you have the opportunity to get insurance through your employer, it is irresponsible not to do it.

The #1 (or #2) reason people file bankruptcy is medical bills. I say number 1 or 2 because it’s right up there with credit card debt. And depending on what set of statistics you’re reading, it will either be number 1 or number 2. And it’s interesting that many of the people who file because of credit card debt, actually had paid some of their medical debt on credit cards and couldn’t pay the credit cards. So, it’s a big deal out there people.

"I can rely on TennCare/Medicare if I need to" This drives me bonkers. I have a friend who does not have insurance for herself or her husband, and she has said that when they are going to try for another baby, “it’s okay because Medicaid will take care of her and the baby while she’s pregnant.” Ugh….it drives me nuts because the government can’t even take care of itself…is it really going to take care of you?

How many of you do not have insurance through your employer? Or know someone who doesn’t?

Individual health insurance policies can be quite pricey. When my husband switched jobs a couple years ago, there’s always that 90 day waiting period, and I did not let us go without insurance, so we went the route of individual policies. There are ways to save yourself a little money on the premiums.

1. Raise the deductable2. Instead of a 80/20 co-pay, raise it to a 70/30. That will lower your premiums, but you’d better have your FFEF or a HSA. 3. Have a higher stop loss on the policy. Stop Loss in individual policies means that you will have a maximum out of pocket. For example, our health insurance policy has a maximum out-of-pocket expense per family per calendar year of $5,000. After the 80/20 split, we pay up to $5,000 (which would be our 20%) – anything beyond that, they pay 100%. It came in handy last year when Cadence’s birth racked up over $125,000 at Vanderbilt’s NICU, without a stop loss, we would have had to pay $25,000 out of pocket. A $10,000 stop loss will also keep your premiums down, and it will make it a decent buy.

Only do these things if you have an Emergency Fund or Health Savings Account to cover the extra risk.

How many of you have some kind of self-employed income in your home? Or know someone who does? This is a great choice for those who are self-employed. It is only for those who are self-employed.

Look at a MSA (Medical Savings Account), which is a major medical insurance policy with a tax deductable savings account attached. It works with a large deductable and you can only get it if you’re self-employed. You can take a $4500 deductable with an 80/20 split (and you can do that with a FFEF) and you can get a HUGE drop in premiums. With the MSA, you are allowed to save, tax deductable, 75% of your deductable into a Medical Savings Account every year. It is like an IRA, but without penalties when you use it for medical related expenses. You can take that money out and spend it on medical needs without a penalty. This can be doctor visits, major medical bills, or even a bottle of tylenol.

For healthy self-employed families, you’d profit from this. It’s a good plan.

Disability Insurance

This is THE most under insured policy in North America. If you work, you need to look into this immediately, and I’m talking you’d better be calling someone or going into HR tomorrow.

Disability Insurance replaces your income due to disability. It usually replaces around 60% of your regular income.

You are 12 times more likely to be disabled than to die before the age of 65. A 28 year old guy came up to Dave once and said “Dave, you saved our family’s life because you’re looking at a man that makes $60,000 a year and is on permanent disability.” He was declared permanently disabled at 28 years old. Because he covered this issue, his family is surviving. (yes, he made 100,000 a year, but if he didn’t have disability insurance, his paycheck would have gone from 100,000 to 0.

There are 2 kinds of disability products: Short Term Disability (STD): I generally do not recommend this products for a couple reasons. 1. if you have a fully-funded emergency fund, you are self-insured for the 90 day elimination period before LTD kicks in. And 2. Because you’re not going to be all better in 3 months when you lose a limb, have a stroke, or whatever. The only exception where I do say it’s a decent buy is if you are a young couple and the wife is working outside of the home and you are planning on having children in the near future, STD is a good option. I was lucky enough to sign up for STD at my last job one month before I got pregnant with our first son, Hunter. Because I had that STD in place before I got pregnant, I was paid 60% of my salary for 3 months while out on maternity leave. I didn’t return to work, but it was great that I had that coverage because I still had money coming in.

Long Term Disability (LTD): This is the way to go. Unless you’re going to be growing your family in the near future, just pump up the EF and stick with LTD.

For LTD Insurance, you want to get the kind that is called "own occ" or "occupational" - that means that if you cannot do what you are trained to do, then you are considered disabled. That means that if my husband, who is an IT guy, lost the use of his hands. Then he’d get paid for X amount of years before he had to find something else that he can do.

I know I tell you to shop around for the best bargain, but if it is offered through your place of employment, get it there. Don’t even bother to shop around because you will not find it cheaper than you can through a group policy. It just doesn’t happen, so get it through your work if they offer it. Just ask HR.

Long Term Care Insurance

Long Term Care Insurance covers nursing home and in-home care. If you are 60 years old or older, I highly recommend getting this insurance. If you are younger than 60, invest the premiums to be able to self-insure yourself through this. If you invest your money wisely and have a million dollars in assets by the time you’re 65, then you’re self insured and you can afford a nursing home stay.

Regardless of your age, this is a big deal to think about now because you might not be over 60, but your parents are. And you’re going to have to sit down with them and have the talk. Yes, the dreaded talk. They thought the birds and the bees talk was hard enough to give to you…it’s got nothing on the nursing home and long-term care talk you have to give them. The largest issue facing the babyboomers today is the elder care of their parents. So, you’re going to have to have that talk with them. If not, when they are ill you are going to be faced with the burden of putting them in a welfare nursing home because they do not have the money to afford anything else or coming up with the funds yourself.

When having the talk, there is this thing called "The Powdered Butt Syndrome". Once someone has powdered your butt, they don’t want to take advice from you. But you need to go in, armed with some statistics like: 60% of the people over the age of 65 will require some long term care in their life. 20% will need it for 5 years or more.

A lot of people say that they'd be fine being sent to a state-run home, and I have heard of people saying that they'd just hide their parents' assets so that they can qualify for the free care. If you want to hide mom & dad’s assets, then you’re saying that you’d want to quit your job to get on welfare. The federal government, by law, can look back 60 months and un-do any asset transfers to keep you from taking advantage of welfare nursing homes so that they can get free government nursing home care. Doing that is now a criminal offense and is punishable by law.

Your parents (or your) assets must be liquidated before any type of government funding can take place. Medicaid allows for the spouse to keep the home, 1 car, and up to $79,000. Everything else will be used for nursing home care until it is depleted. However, if your spouse is deceased, then all of their assets will be disbursed to pay for elder care.

When everything is gone, then the government will step in and let them go to a Medicaid run institution – which is a welfare nursing home. The level of care there is not what most of you want your parents to be.

You absolutely have to look into long term care insurance. A 62 year old with Alzheimers can live up to 25 years out of their minds. That is close to a million dollars worth of care. All of their hard work and life savings have just gone down the drain. This is not a game folks. This is something you absolutely need to look into and you need to talk to your parents about it.

I’ve tried twice to have that conversation with my parents, and I will be having it again since it didn’t make it through the first 2 times. This is imperative that you have to have the talk with them.

I always thought it was odd that they call it life insurance since it insures your death, but in any case, it is definitely an insurance that most people do not understand. In fact, most people have no idea what kind of life insurance policy they own, which violates our last class to not buy anything you don’t understand.

Now this is probably going to tick some of you off, but that’s okay because I’m giving you the best information from the best sources, and I’m interested in telling you how you can win with money.

There are 2 Types of Life Insurance: Term Life (for a specified number of years) and Cash Value (for your whole life).

Cash Value Insurance

75% of people in America have this type of insurance. Why? Because it is what the insurance agents push the most. Which should throw up a big red flag right there, but for some reason it didn’t.

The premiums are higher because it covers you throughout your entire life and because the policy has a savings account attached to it. It builds cash value, thus the name "Cash Value Insurance." Part of your premiums are invested to gain cash value that you can take out. Many people see this as a way to save for retirement.

Often you will hear, "Term life is like renting, but cash value is like buying a home." Of course, the people saying this are the agents who want you to buy it…but hey…

There is a big myth floating around out there that we need do debunk right now.

Myth: The need for life insurance is a permanent situation and is ever growing.Truth: The only ever growing and permanent situation is the agent's need to make more money.

Nothing is permanent about insurance! If you get a 20 year level term life insurance policy, just think about where you will be in 20 years. In 20 years, when the kids are grown and gone, the house is paid for, you're debt free (because you've been doing this plan), you're sitting on a nestegg for retirement plus your emergency fund....you are then self-insured. There is no need for life insurance at that point.

Don't believe me? Well, I'll use my family as an example. My husband and I are 28. We have 3 kids (ages 3 1/2, 2, and 9 months). In 20 years our children will all be adults and will hopefully be out of the house. We will be debt free next year, the house will be paid for by 2012, and we'll have approximately $250,000 invested by 2029 (not including our fully-funded emergency fund). If my hubby dies after the next 20 years, I think I'll be able to muddle through life debt free, no kids at home, and a nestegg.

In 20 years, we will be self-insured.

So, let's compare apples to apples:

For $100 a month, Jon can buy about $125,000 of cash value life insurance. It builds cash value that he can take out. In 20 years, it'd be worth about $22,000. That sounds pretty good.

However, Jon can buy $125,000 of term life insurance for about $9.00 a month. He can invest the other $91 and have about $47,000 in 20 years. That sounds a lot better.

Now there are 2 problems with his example. 1. No one is going to want to write a $9.00 a month life insurance policy, and 2. He does not have enough insurance. If he dies, and his wife invests the money (and let's just make it easy and say she can get about 10% in a good growth stock mutual fund), the she would only have $12,000 a year to live on without draining the nest egg. I don't know many people who could do that. I could probably come close, but even then it'd be VERY VERY difficult and we'd REALLY have to sacrifice and scrape by.

HOW MUCH DO YOU NEED??

You need 10 times your annual income, so if you make $40,000 (which is what we’ll say Jon makes), then you’d get $400,000 of life insurance.

A full time mom brings economic value to the home, which is why she needs life insurance as well. She needs to have close to what her husband would have, as it would need to offset the things that she does. If I were to die, my husband would have to bring in Marry Poppins to take my place…and I hear she doesn’t work cheap. So, the husband would have daycare expenses, higher grocery expenses (because he’s not used to doing the shopping, couponing, cooking, etc), and he’d have to find ways to pick up all of her jobs too. So, a stay at home mom brings economic value to the home.

Now, don't get so much that you have to sleep with one eye open. My BIL brags about his $1 Million policy (in whole life) and says that he’s worth more dead than alive. He makes about $40,000 a year, and his premiums for that $1 Million policy are beyond outrageous. He is beyond over-insured. Do not get caught in that trap.

So, let’s give Jon the right amount of coverage. $400,000 for Jon of Term Life Insurance is about $25.00 a month. He can take that $75 a month he’d be saving in not paying whole life or cash value insurance and invest it. In the event that he dies before the 20 years are up, his wife gets $400,000. At a 10% investment return (as I said earlier) she'd be able to live on $40,000 a year - which is what he makes. Ooops, looks like we just replaced Jon.

If Jon takes out that $125,000 cash value insurance and pays $91 too much every month, and 20 years go by and he has $22,000 of cash value on his policy and he dies. Then what happens to the cash value? Does Jon’s wife get $147,000?

Nope…she still gets $125,000….the company keeps the other $22,000. Doesn’t seem very fair, does it????? That's what I call a RIP-OFF! Since none of us know when we're going to die, how often do you think people actually take out their cash value? I'd venture to say that more often than not, the company gets to keep the cash value. After all, look at their big beautiful buildings. Those aren't cheap and I'm sure they've had a lot of cash value to buy them with.

Cash Value (whole life) is the worst financial product on the market today, but the companies are getting sneaky so they've come up with 2 newer models called Universal Life and Variable Life. They claim that Universal Life yeilds about a 4.5% return on the cash value, and that Variable Life yields about 12-14% on the cash value. And they do; however, these policies walk down a hallway and people take out fees left and right. Fee, fee, fee, fee...it sounds like a french poodle there are so many fees. So, after all the fees, you can expect about half of what they say you can get - IF you are lucky. And that's only if you happen to cash out your cash value before you die.

If you have these types of policies, cash out their value and invest the money elsewhere. Dave Ramsey says, "You are always better to stick with a 20 year level term life insurance policy, and do your investing outside of the insurance company." Money Magazine, Newsweek, the Wall Street Journal and more agree with him.

Life Insurance Summary

Never buy cash value: returns are low, cash value is kept by the company if you die, premiums are too high, and only agents think it is a good idea.

Buy Term Life Insurance: low rates, invest the difference in premiums so that you can become self-insured.

Now if you are over 45-50, and you have a whole life policy, then I’m not saying you need to go out and cancel it. I’m saying that you should pull your cash value from it, and invest elsewhere – maybe a good growth stock mutual fund. That way, your cash value won’t be forever gone when you die.

If you are debt free, have no house payment, have no children at home, have a substantial nest egg, have investments, and are self-insured….then drop the policy.

If you have debt and are over the age of 50, then you may have to stick it out with your whole life policy until you can be self insured.

But for those of us who are younger, the time is not to get some quotes on some good 20 year level term. If you are doing everything I’m teaching you and that Dave’s telling you to do, and you’re really doing it….then in 20 years, you will be self insured and you will not need to pay for life insurance for the rest of your life.

Avoid These Types of Insurance

Cancer Insurance - healthcare covers cancer too.

Accidental Death Insurance - You're not double dead because it was an accident.

Life Insurance on Children - You know, those Gerber policies. Avoid them….they are not a good investment. Instead, put your child’s money away and invest it yourself. They will have a much better return and won’t be sucked into buying cash value life insurance. As I mentioned, we do have a $15,000 rider on our life insurance policies to cover the burial costs of our children, should it be necessary. It’s not very expensive at all – since it’s a term policy, and we know that everyone in the family is taken care of, until we can be self insured.

Credit Life & Credit Disability - it's 90-100% more expensive than regular term life insurance.

Credit Card Protection - seriously, you want to protect your credit cards??? It's just another way to rip you off.

Pre-Paid Burial Policies - invest the money instead of parking it at the funeral home.

Mortgage Life Insurance - the face value decreases as time goes by because your mortgage goes down. Instead, put a sticky note on your life insurance policy that says, "Babe, pay off the house."

Duplicate coverage - it's never a good idea because the 2 will fight over who the primary provider is and no one will ever pay.

Pet Insurance - that's what an Emergency Fund is for, and seriously, if fluffy is going to cost you $10,000....it might be time to put fluffy to sleep. It's a pet.

One last thing I want to talk about insurance is that you cannot convince someone who has already made up their mind about it. There is no telling my Brother in Law that his policy sucks because he's being ripped off.

And you cannot go into your agent's office and try to convince him that he ripped you off, or that he should switch to term life insurance. Why? Becuase him realizing the truth of this would not only make him have to re-evaluate the way he thinks, but he'd have to look for a new line of work. So, just fire him and move on.